There is a huge cost savings to be realized in healthcare that would improve quality and access. As a physician in a large academic hospital, I see enormous wastage of resources, but discerning patients can see the tip of this iceberg at every healthcare encounter. This wastage is hidden from view, but self sustaining. Addressing it can only be done with a political solution – not by incremental adjustments. If addressed, however, there is a potential win - win - win out there, for patients, doctors, and the Democrats who recognize the problem and solve it to the benefit of (most of) us all. What follows is a bit complicated. In that complexity, however, lies a big solution to our health-care ills.
Healthcare costs consistently rise despite our best efforts. One potential solution to this mess that has not been voiced in the present national debate. This change can be accomplished in a manner that would require no disruption of the present dominant employer-supported, insurance-based mechanism with government assistance for targeted groups, and could save enough money to fund universal access. It is, however, a major change that can only be accomplished by a top-down political initiative. I believe this change will be very popular politically, in particular as a response to the very unpopular HMO, PPO, managed care system that has evolved in years, as well as the enmity that has been built by conservatives against a single payer option. It is a potential winning program for a Democratic initiative in healthcare, to be contrasted to a Republican program that favors big pharma and big medicine.
Although some of the details are complex, the fundamental principle of this change is simple. Basic economic incentives need to be reintroduced into health care in a way that favors patient care and caring. This simple change would be self-regulating and can be summarized in simple language.
At present, all physician charges are based upon registration of a procedure performed. This is true for simple office visits, as it is for surgical procedures. The enumeration of the requirements that constitute each procedure are memorialized in a telephone-book sized book of highly technical codes ("CPT"). In theory the value of any one code bears some relationship to the service provided. In practice, however, the relationship is highly distorted. There is a massive bias in favor of procedures over thought, patient-physician discussion, and follow-up. Removing a skin lesion with a simple punch biopsy, a procedure that takes less than 10 minutes, is worth $4-500; a physician who decides that it is benign by its appearance alone is constrained to a 99201 charge code, worth about $75. This use of a code book to justify billing introduces massive inequities between time spent and physician compensation, and thus produces perverse incentives that favor medical procedures over problem solving or caring. Moreover, the physician who performs a procedure rather than a service frequently begets additional costs: that skin biopsy would trigger a pathologist evaluation, costing another $3-400.
There is a huge and ever advancing infrastructure (requiring on average more than one "coding specialist" for each physician) to "game" the billing system, in order to submit the highest bill possible. There is a comparable infrastructure within payers to down-code the bill based upon fine textural analysis of the medical note. The result is a cat-and-mouse game between doctors and insurance companies that is highly nonproductive. As a clinical doc, I don't know the size of this infrastructure, but virtually all physicians have in their employ an individual tasked solely to maximizing the codes billed. Between physicians and payers this would have to be responsible for at least 40% of present total medical costs. Though sustaining this system is in the short-term interest of physicians and payers, it is ultimately a huge drain upon our health care dollars. An "arms-war" proliferation of increasingly complex regulations, countered by increasingly devious work-arounds, only increases the cost. There is no constraint upon complexity. As a consequence patients and physicians alike play within with the system as best they can. Its too big and complex - which turns out to be its chief defense against change.
A better system is easy to imagine. ALL physicians should bill the same amount based simply upon the time spent. Period. This can be easily verified by recording the clock, is fraud proof (computer checks can easily identify physicians who would bill for the same minute twice), and produces no perverse incentives. There is no bias to invasive, expensive procedures. The need for massive infrastructure to produce the maximum bill for the medical encounter vanishes. The resulting cost savings (increases in medical administration, matched by the competing insurance company administration, vastly outpaces increases in drug costs) could easily finance expansion of the present medical system to the uninsured - or a rebate to employers.
I suspect that there would be wide support for this solution, but there is a big caveat. Simply put, putting such a system in place would not be easy. A change such as I propose cannot be done by increment, or on an experimental basis in one state. It can only be achieved by a national political initiative.
Of course some new regulation would be necessary, but in comparison to the present system the complexity would be vastly decreased and basis for rules more transparent. For example, sub-specialty physicians with longer training requirements could charge incrementally more per year of post-doctoral training. Importantly, however, physicians in non-surgical ("cognitive") and surgical specialties with similar complexity of training are compensated equally. Primary care physicians would be compensated better then they are now, while those in highly procedure-oriented specialties would be less well compensated. There would have to be an additional portion of any bill dedicated to consumables, depreciation for equipment used and office space, and malpractice insurance. These sorts of regulations would have the advantage of fairness, and could be arranged to solve the national problem of physician mal-distribution.
Patients would be free to acquire care from any physician of their choosing. However, the requirement for primary care referral makes sense for integrating patient care and minimizing errant patient self-diagnosis, but the referring physician is compensated for the time in considering and initiating that referral. Insurance companies would compensate care at a standard rate for time spent, post-doctoral training time for the level of specialist seen, and the consumables required. The standard rate for physician encounter would be capped on a sliding scale for basic type of service (clinic visit, surgical visit, etc.) so that patients would have to pay an increasing portion of inefficiently long visits. A second sliding scale for ability to pay could minimize this burden to the poor. Regulation of the appropriate amount of coverage would be the most complex part – but would still vastly more efficient than the present system, and the costs would be known up front. By this means physicians and patients would have incentive to use medical resources efficiently.
I believe that there are major political advantages to this proposal. It could be a strong plank in any Presidential bid. The last (Democratic) attempt at a comprehensive solution has come to be seen as a partisan disaster, yet the piecemeal (mostly Republican) managed care response is universally despised. We are trapped in a system where all the offered choices are easily vilified, yet the consequence of the resulting inaction is hated even more. Access to health care, the increasing depersonalization of health care, the incredible costs of health care, are a major irritant to people across the political, economic, and geographic spectrum. This plan could be a winner politically.
In the medical community the chief opposition to this change will be from specialty physicians who would lose income. The chief proponents will be the primary care physicians who see patients daily. Most people like their local primary care providers - if he/she can afford to spend time with them. This plan would likely split the medical community, but I suspect most people would side with their local docs and nurses. With medical costs now breaking out of managed care binds, the ever-increasing cost pressures have a real political dimension. I believe the time is now for a paradigm shift in health care compensation that will pay for the care that our citizens need, without the unseemly pressures that support more remunerative procedures, or the health care finance administration that supports it. The cost accrued cost-savings would likely be more than enough to pay for universal access to care, in a system that extends choice of provider to all.